
Kotak Mahindra Bank FD premature withdrawal penalty varies based on the duration the deposit is held. No penalty is charged for shorter terms, while longer durations attract up to a 1% penalty. The final payout is reduced due to this deduction.
Kotak Mahindra Bank FD premature withdrawal means closing your fixed deposit before its original maturity date. The bank permits this in case of urgent financial needs, but certain conditions apply. If the FD is closed within 7 days of booking, no interest is paid, and only the principal amount is returned. In all other cases, Kotak Mahindra Bank FD rates are recalculated based on the actual tenure the deposit was held. A penalty may also apply depending on how long the funds remained invested.
Kotak Mahindra Bank allows you to close your Fixed Deposit before maturity through both online and offline channels. Here’s a step-by-step guide for both methods:
To close your Fixed Deposit instantly using Kotak Net Banking:
If you prefer to complete the process in person:
Kotak Mahindra Bank allows customers to withdraw Fixed Deposits before maturity, but doing so involves certain drawbacks. Here are the key disadvantages to consider:
The bank reduces your interest rate based on how long the FD has been held. Here’s the applicable penalty:
Tenure of Fixed Deposit | Penalty |
Up to 180 days | Nil |
181 to 364 days | 0.50% |
365 days and above | 1.00% |
The penalty is subtracted from the applicable FD interest rate. You can estimate your loss using this FD Premature Withdrawal Penalty Calculator.
If your Kotak Mahindra Bank FD is linked to a credit card, you cannot close it prematurely without clearing all outstanding dues. The FD remains locked as collateral, and a No Objection Certificate (NOC) may be required to process the closure.
Closing a long-term FD before maturity with Kotak Mahindra Bank stops the compounding process, leading to lower total earnings.
Premature withdrawal of a Kotak Mahindra Bank FD can disrupt your financial plans. It may affect your savings goals, reduce expected returns, and lead to a shortfall in funds for future expenses or investments.
Premature withdrawal of a Kotak Mahindra Bank FD may affect any loan linked to the deposit. Since FDs are often used as collateral, closing the FD early can lead to changes in loan terms or even cancellation of the loan facility.
When you withdraw your Kotak Mahindra Bank Fixed Deposit before maturity, the interest is recalculated based on the actual tenure and is fully taxable under “Income from Other Sources” as per your income slab. As per Section 194A of the Income Tax Act, Tax Deducted at Source (TDS) at 10% is applicable if the total interest earned in a financial year exceeds ₹50,000 for regular individuals and ₹1,00,000 for senior citizens. If you fail to provide your PAN, TDS is deducted at a higher rate of 20%.Â
Here are some smart strategies to help you avoid premature withdrawal of your Kotak Mahindra Bank FD:
You can close your Kotak Mahindra Bank FD before maturity through both online and offline methods. In urgent situations, this can be done using Net Banking or by visiting the nearest branch. However, premature withdrawal may lead to reduced returns due to penalties and lower applicable FD interest rates. To avoid this, plan your FD tenure carefully, maintain an emergency fund, or use facilities like overdraft or sweep-out.